Sars has increased powers under the Tax Administration Act

The recently promulgated Tax Administration Act, No. 28 of 2011 (TAA) contains provisions that grant some dramatically increased powers to the South African Revenue Service (Sars).

Tax recovery on behalf of foreign governments

Section 185 of the TAA contains the measures available to Sars to recover tax on behalf of foreign governments. Broadly defined, the provisions of section 185 provide that revenue authorities of a foreign country (with which South Africa has a tax treaty) can request Sars to assist in the collection of foreign taxes due by a person to that country.

These powers are not an entirely new development. Similar provisions were contained in the repealed section 93 of the Income Tax Act, No. 58 of 1962 (the Income Tax Act), and some remain in section 75 (not repealed) of the Value-Added Tax Act, No. 89 of 1991.

The TAA envisages two types of mutual assistance requests from foreign governments. The first is a request for conservancy of an amount of tax alleged to be due in a foreign country, where there is a risk of dissipation or concealment of assets located in South Africa. The second is a request for the collection of an amount of tax due under the laws of a foreign country. Whereas the latter is not a new concept, the provision dealing with a request for conservancy was not previously dealt with under the Income Tax Act.

WHY REGISTER WITH SAIT?

Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.